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Industry Insights

The Difference Between Sworn Statements and Lien Waivers—and When to Use Which

There’s more paperwork involved in construction projects than almost any other industry. And some of it can be pretty confusing, especially if you’re new to construction accounting. 

Two types of documents that come up when submitting payment applications are sworn statements and lien waivers. If you’ve recently started working for a trade contractor and are trying to make heads and tails of these common construction docs, this article is for you. 

Read on to learn the basics of sworn statements and lien waivers, including:

  • The purpose and legal implications of each type of document
  • The difference between sworn statements and lien waivers
  • When to use which document
  • Tips to manage sworn statements and lien waivers

Sworn Statements and Lien Waivers: Definitions, Requirements, and Legal Implications

Both sworn statements and lien waivers largely serve the same purpose—to protect property owners and general contractors (GCs) from having a mechanic’s lien filed against them

Sworn Statements 

Sworn statements list all contractors and suppliers that are providing labor or materials for a project. Owners and GCs use them for transparency into who’s working on the project and how much they’re owed so they can better track payments and watch out for potential payment issues.

When you sign a sworn statement, you swear that no one other than those listed in the statement needs to be paid for the project. If the information contained in the statement isn’t accurate, you can be charged with perjury.

For every company listed, you must include:

  • Name, address, and telephone number of every contractor and supplier working on the project
  • The total amount for their contract
  • Any amount previously paid
  • Payment currently owed
  • The remaining balance on each contract 
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Lien Waivers 

Lien waivers are documents that subs must sign at the time of requesting and/or receiving payment. GCs often also require you to have your lower-tier subs and vendors sign and submit lien waivers. It’s their assurance that they won’t get a lien on their property for lack of payment down the road. 

When you sign a lien waiver, you give up your right to file a mechanic’s lien in the future for that portion of the project.

For a deep dive into everything you need to know about lien waivers, check out our lien waiver webinar.

Differences Between Sworn Statements and Lien Waivers: Notarizations, Interested Parties, and Form Types

Even though the primary purpose of these documents is ultimately the same, there are some key differences between the two. 

Sworn Statements vs. Lien Waivers

Notarization

Sworn statements must always be notarized. 

Lien waivers only need to be notarized in Wyoming and Mississippi (or when the GC requires it).

Interested Parties

Sworn statements primarily concern property owners, GCs, and lenders.

Lien waivers primarily concern property owners and GCs.

Form Types

Sworn statements are generally the same for all stages of the project.

Lien waivers exist as four different types, each of which gets used at specific times during the billing cycle:

  • Conditional Progress
  • Unconditional Progress
  • Conditional Final
  • Unconditional Final

Learn more about different types of lien waivers and when to use each in this comprehensive guide

State Regulations Regarding Sworn Statements and Lien Waivers

Requirements for these documents can vary from state to state, contractor to contractor, and project to project. A handful of states have some regulations to be aware of.

You must use sworn statements for every project in Michigan or Illinois. 

  • Illinois requires anyone providing labor, service, material, fixtures, apparatus, or machinery for a construction project to provide a sworn statement, but there aren’t any specific form requirements.
  • Michigan, on the other hand, has a specific sworn statement form you must use. Here’s the version hosted on the state’s public works website.

Lien waivers aren’t required in any state. However, 12 states—Arizona, California, Florida, Georgia, Massachusetts, Michigan, Mississippi, Missouri, Nevada, Texas, Utah, and Wyoming—have standardized lien waiver forms you must use for a lien waiver in those states to be valid.

When to Provide a Sworn Statement or Lien Waiver

There are few clear standards around these documents. Whether or not you need them varies from project to project. So, how do you know when to provide a sworn statement or lien waiver?

One approach is to submit them whenever the GC or property owner requests them. 

  • They can ask for a sworn statement at any time. It typically comes up after you submit a pay app, most commonly when it’s for the final payment.  
  • Lien waivers are more commonly expected every time you submit a pay app and just before you receive payment. 

A better strategy is to be proactive. Waiting for someone to request a statement or waiver only causes payment delays. Review every contract ahead of time so you understand the expectations for each job. 

We also encourage subs to make sworn statements and lien waivers part of their pay app process. If you submit these docs every time you submit a pay app, you’ll build better relationships with GCs and get paid faster.

Tips to Manage Sworn Statements and Lien Waivers

Beyond a proactive approach, here are three additional tips for effectively managing sworn statements and lien waivers. 

Using the Right Form

This can be easier said than done. In most states, GCs have their own proprietary forms. So it’s always a good idea to check in and see which versions they want you to use.

Remember, Michigan requires a specific form for sworn statements. And 12 states have standardized lien waiver forms you must use for a lien waiver in those states to be valid. You can find all of these state-specific formats, along with generic sworn statements and lien waiver forms, on the AIA website.

One way to ensure you’re always using the right form is to set up a forms library with every GC’s required forms. We’ve been steadily expanding our library of forms at Siteline. So far, we’ve collected more than 7,500 forms from over 5,000 GCs!

Verifying (and Automating) for Accuracy

When it comes to sworn statements, you need to list every supplier and lower-tier sub while also remembering to double-check all your calculations. Make sure the balance to complete is in line with the figures in your continuation sheet. Why? GCs will come back to you if they find discrepancies—and you’ll wind up dealing with payment delays and damaging trust with partners.

To streamline this process, consider using Siteline. Currently, our tool pulls A/P invoice information over via integrations with Sage 300 CRE, Sage 100, Sage Intacct, Spectrum, and Vista (with more options to come) to automatically complete sworn statements and affidavit forms. This automation can help prevent costly delays and maintain strong relationships with your GCs.

Consistently Collecting Lower-Tier Lien Waivers

We strongly recommend this as a best practice, regardless of whether GCs require them. If you set it as an expectation from the beginning, you’ll always have them when you need them. It’ll also save you a lot of time, calls, and emails having to track them down later on.

Siteline makes it easy to manage lien waivers—both yours and your lower tiers’. For example, Industrial Commercial Systems uses Siteline’s lien waiver management module to manage 200+ lien waivers each month. It digitizes all their lien waiver forms, collects digital signatures, and packages them up for one-click submission to GCs.

If you’re interested in streamlining lien waiver management, collecting waivers six times faster, and getting paid three weeks sooner, schedule a demo of Siteline today.

Co-Founder · Head of Construction Solutions
@ Siteline

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